Investment: Internet deals give Zergo a 30% boost
Wednesday 20 January 1999
Zergo is forging closer links with Intel, the US computer chip giant, while also striking a strategic alliance with PricewaterhouseCoopers, the consultancy firm, to sell its products in Europe and the Middle East.
The news drove Zergo's share price up by 162.5p to 702.5p. The shares have risen more than fourfold since the beginning of December on hopes that Zergo will cash in on the booming market for commerce conducted over the Internet.
Last month Zergo merged with Baltimore, its Irish rival, in a move that made it the world's second-largest supplier of Internet security software.
Under the terms of its deal with Intel, Zergo will develop products to conform with a security standard the US group has designed. Matthew Bowcock, Zergo's marketing director, said the deal put the company in a good position to supply software to Intel when it releases processors for the electronic commerce market.
The PwC agreement, meanwhile, will lend the consultancy group's muscle to Zergo's Public Key Infrastructure products when developing electronic commerce solutions.
Industry observers welcomed the announcements, but said they did not immediately add a great deal to Zergo's prospects. "In order to crack it in this market you have to crack it in the United States," said George O'Connor, an analyst at Granville, who rates the shares a hold. "Our concern is that we want to see these guys actually go out and win business in the US."
He added that the market in the shares seemed frothy after yesterday's rise, which lifts Zergo's market value to almost pounds 200m. However, he said investors were unlikely to pay much attention to conventional valuations. "People are buying into a concept," he said.
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